OHL Trading Strategy – What Is It? (High, Low, Backtest, Performance Analysis)

Intraday trading is one of the most exciting but, at the same time, the most demanding form of online stock trading, and the OHL trading strategy helps you focus on the most important aspects of the trading day. As a day trader, you want to focus on where big money is made in the markets using the OHL strategy. But what is this strategy about?

The OHL trading strategy is an intraday trading strategy for stocks where the configuration of open, high, and low price levels in the first few minutes of the session is used to determine trade entry. A buy signal is generated when the open price is the same as the low price for the day, while a sell signal is generated when the open price is the same as the high price for the day.

In this post, we take a look at the OHL trading strategy. At the end of the article, we backtest the strategy.

Related reading: – Looking for a complete list of all trading systems? (We have hundreds)

Table of contents:

OHL – what is it?

OHL refers to open, high, and low, which are three of the four parts of the OHLC price bar. The open price is the price at which the day’s trading session opened. The high refers to the highest price of the trading day as of the moment, while the low refers to the lowest price of the trading day as of the moment you are checking it. The other part of the OHLC price bar is the close, which is the price at which the price closes for the day.

The close is also important but not covered in this article. You might want to check out our article about the Internal Bar Strength Indicator (IBS).

The open, high, and low (OHL) price levels of each trading day are very important to intraday traders, as they can set the tone for the price movement for the trading day. Day traders and scalpers use them for their trading strategies, one of which is the OHL trading strategy.

What is the OHL strategy?

An OHL trading signal is generated when the opening price is the same as the highest price for that particular trading day or when the opening price is the same as the lowest price for that particular trading day within the first few minutes of the day’s trading session.

To put it simply, a buy signal is generated when the open price is the same as the low price for the day, while a sell signal is generated when the open price is the same as the high price for the day. The trading rules can be summarized as follows:

If Open = Low during the first few minutes of the day (say first five minutes), go long with the next price bar:

If Open = High during the first few minutes of the day (say first five minutes), go short with the next price bar:

For instance, the US stock market opens at 9:30 AM EST. During the first minutes after the stock market opened, you can determine if there is an OHL trading signal for that day by checking the open price and the day’s high and low as of that moment.

If the open is the same as the high or the low price, you can easily frame a daily directional bias — if the open is the same as the low, you anticipate a bullish day, and if the open is the same as the high, you anticipate a bearish day. We have backtested